Tax Lawyer's Blog

CPA Tonya Moreno writes that more states are charging sales tax on digital downloads to pump up state revenue. 

On July 1, 2010 Wyoming became the latest state to begin charging 4% sales tax on digital downloads held for permanent use.  And they’re just one of many states that tax downloads.  New Jersey was the first state to tax digital products in 2007, and each year the list of states grows.  These types of sales taxes are levied on downloads of digital audio, video, ebooks, ringtones, and other digital products.  Downloaded software or software updates are generally subject to separate, more complex rules.

These states have passed laws that impose sales taxes on digital products (keep in mind that digital products are defined differently in each state and some states tax only certain digital products and exempt others):

1. Alabama
2. Arizona
3. Colorado
4. District of Columbia
5. Connecticut
6. Hawaii
7. Indiana
8. Kentucky
9. Louisiana
10. Maine
11. Mississippi
12. Nebraska
13. New Jersey
14. New Mexico
15. North Carolina
16. South Dakota
17. Rhode Island
18. Tennessee
19. Texas
20. Utah
21. Washington
22. Wisconsin
23. Wyoming

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